By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On February 9, 2016, the D.C. Circuit ordered the U.S. District Court for the District of Columbia to reconsider a lawsuit seeking to compel the Department of Health and Human Services (HHS) to meet statutory deadlines for reviewing Medicare claims denials. This order overturns the district court’s December 2014 decision in the American Hospital Association’s (AHA) lawsuit. The district court had decided that judicial intervention was not appropriate in such Medicare administrative cases. The AHA and three hospitals that derive a substantial chunk of their revenue from Medicare, filed the suit seeking relief for Medicare’s failure to provide timely reviews.

To read the lower court’s decision to throw out the lawsuit in 2014, click here.

Medicare Appeals Backlog.

For more than a year, the AHA and three hospitals have been seeking relief for the delays in Medicare appeals and the lack of anything approaching a timely review of Medicare claims denials. They claim that this has detrimental effects to the Plaintiffs, such as their having to cut jobs (because of the delayed income) and postponements of the purchase of new equipment. According to the lawsuit, “lengthy, systematic delays in the Medicare appeals process, which far exceed statutory time frames, are causing severe harm to providers of Medicare services, like the Plaintiff hospitals.”

The AHA addressed this plight in having to wait well-beyond the 90-day statutory time frame to have their claim denials heard by an Administrative Law Judge (ALJ). The circuit court agreed that the increasing backlog of Medicare claims was out of hand as the number of appeals before waiting for an ALJ hearing has doubled since 2009 and is still growing. In 2013, the Office of Medicare Hearings and Appeals (OMHA) made a decision to suspend new requests for ALJ hearings (the third level of appeal) for at least two years, as a result of the increasing size of the Medicare appeals backlog.

For example, HHS can process about 72,000 appeals a year, but it received 400,000 in 2013. By 2014, the backlog had accumulated to 800,000 and some claims could take a decade to process, the court said!

The Balance Between RAC and Statutory Guidelines.

The court of appeal recognized that HHS is facing a tough decision; Implementing the Medicare Recovery Audit Contractor (RAC) program, which has been credited with increasing the workload for OMHA, and meeting the 90-day statutory time frame for Medicare appeals. The appellate court also acknowledged the benefits of the audit process, which has recovered billions of dollars in fraudulent or improperly billed payments. However, the focus weighed more heavily on HHS and budgetary constraints. The court stated that increasing funding for HHS to increase resources would alleviate the Medicare appeals backlog.

Statutory Time Frames Are Mandatory.

The appeals court agreed with AHA that the statutory time frames are mandatory, and that the statute does impose a clear duty for HHS to comply with deadlines and time frames. “Federal agencies must obey the law, and congressionally imposed mandates and prohibitions trump discretionary decisions,” stated the appeals court.

The AHA said in a statement that it expects the lower court to rule in its favor and resolve the backlog. “The appeals court affirmed that hospitals can’t afford to have billions of dollars that are needed for patient care, tied up in the appeals process. The decision also affirms that the agency has a clear duty to comply with the congressionally mandated deadlines and that the statute gives hospitals a corresponding right to demand compliance. It refutes attempts by the agency to excuse compliance because of the Recovery Audit Contractor (RAC) program, noting that congressional mandates trump discretionary decisions,” the AHA said in a statement.

There is a legal maxim that goes back to ancient Roman days that is still true today. It is “Justice delayed is justice denied.” It is still embodied in numerous laws and court decisions today. This is why criminal defendants must be tried within a certain period of time (“speedy trial”) and why there are statutes of limitations.

The last time we requested an ALJ administrative hearing in a Medicare appeal for a client, we were told that it would be at least 27 months (!) before a hearing would be scheduled. This is an absurd situation and definitely denies justice to those who are trying to keep health care businesses operating. It would seem than Congress would be taking a more active role in providing resources for additional ALJs and their staffs and mandating strict guidelines under which the appealed claims must be paid, if the hearing is not conducted within the time set by law. This is the only way to provide fairness and due process of law to Medicare providers. Businesses within their districts are closing and voters within their districts are losing their jobs because of their inaction and failure to allocate proper resources.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawfirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone; (407) 331-6620.